Capgemini ‘comfortable’ with top end 2022 targets but sees demand slowing

French IT consulting group Capgemini (CAPP.PA) sees demand slowing in 2023 but expects results at the top end of guidance this year driven by its cloud, data and artificial intelligence businesses.

“The group expects demand to decelerate a bit in the coming quarters, but it remains confident that 2023 will be a year of growth, even if probably not as strong as in 2022,” Chief Executive Aiman Ezzat said on a media call on Thursday.

His comments come amid growing fears that an economic slowdown could dent IT budgets after gloomy results from tech giants Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O).

The company has forecast revenue growth in 2022 of between 14% and 15% on a constant currency basis and an operating margin of 12.9% to 13.1%, which analysts said could be seen as conservative given healthy demand.

Capgemini shares were down more than 2% at 0727 GMT.

The company estimates growth in the fourth quarter at around 10%, chief financial officer Carole Ferrand said on the call.

The group reported third-quarter revenue of 5.55 billion euros ($15.8 billion), up 15.7% from the same period a year earlier at constant exchange rates. Bookings in the quarter rose 13% to 5.43 billion euros.

“Given this very good Q3 performance, we now feel comfortable with the top end of our growth outlook for

2022,” Ezzat said in the company’s statement.

It expanded its workforce 16% year on year, reaching headcount of 358,400 at the end of September.

The group also said it will hire less as growth slows and attrition rate moderates in a stabilising talent market.

The high demand for IT specialists due to a shortage of available workers has forced many companies to increase wages to attract new talent in a competitive market.

($1 = 0.9936 euros)